PMS review: Kotak Special Situations Value Portfolio; can it continue the magic?As the name suggests, Kotak Special Situations Value Portfolio tries to make money from ‘special situations’ in the financial markets. These can occur when there are buybacks, mergers, delistings and so on. The PMS also rests on a second ‘value’ element which involves picking stocks which are trading at a discount to intrinsic value. Kotak Special Situations Value Portfolio will hold 10-20 stocks and be benchmarked against the Nifty 500. This PMS was launched on 31st July 2012. The minimum investment in this PMS is Rs 25 lakh.

A PMS or portfolio management service manages a portfolio of stocks on your behalf. It is similar to an equity mutual fund but with key differences. A mutual fund pools money from several investors and issues units in lieu of its assets. These units have a Net Asset Value or NAV which is declared on each business day.

A PMS does not pool your money with other people’s and does not issue units. The stocks in the PMS are held in your own name and your money in the PMS is held separately from that of other investors. Unlike a mutual fund, you can also transfer your existing stocks to a PMS. In other words, you give your existing stock portfolio to the PMS manager to manage.

Performance of Kotak Special Situations Value Portfolio

Historical Performance 1 year 2 year 3 year 4 year 5 year Since Inception
Kotak Special Situations PMS 12.5 28.9 21.8 36.0 33.4 28.1
Nifty 500 11.5 17.5 8.5 14.3 15.0 14.5

Figures as on 31st March 2018, Source: PMS Presentation

The performance of the PMS has been extremely strong, beating the Nifty 500 by a substantial margin over different time periods, as you can see from the table above. However, note that much of this alpha occurred during a strong bull market in India when mid and small-cap mutual funds also outperformed the indices. The PMS is led less by the standard large cap names dominating mutual funds and more by mid-cap and small cap companies. Here is what its portfolio looked like on 31st March 2018.

Holdings of Performance of Kotak Special Situations Value Portfolio

Stock Portfolio Weight
Siyaram Silk Mills 11.3
Coal India 9.5
KRBL 6.6
Finolex Cables 6.6
Repco Home Finance 4.7
ICICI Bank 4.6
Heritage Foods Ltd. 4.6
Ashiana Housing 4.5
Welcorp 4.4
NIIT 4.4


The PMS will charge a flat management fee of 2.5% per annum. Brokerage and custodial charges will also be levied. There will be no performance fee. There is an exit load of 3% in the first year, 2% in the second year and 1% in the third year. No exit load thereafter.

Should you invest?

The factors that drive the outperformance of mid and small cap stocks in bull markets can go sharply into reverse in bear markets. Invest if you truly are willing to be patient and handle a lot of volatility. Otherwise, you do have safer options (think large-cap or even hybrid funds).

Staff Writer

This article is written by RupeeIQ editorial staff.